This week we learned China holds a record $1.31 trillion of our nation's debt after adding $12.2 billion in December (they're closely followed by Japan at $1.18 trillion).

The news was greeted with the usual outrage and questions over what kind of leverage does this give China over America. For years, it appeared that China has been able to manipulate its currency and the rules, because it supports profligate government spending.

Many wonder: what happens if China cuts off the spigot?

I've come to the conclusion that they're not cutting off the spigots; in fact, they're just getting started. The Chinese want to own it all- lock, stock, and barrel. The ambition of China isn't going to be contained by a Great Wall, mountains, oceans, different languages, or xenophobia; which no longer matters, to trump the needs of spendthrift nations that have squandered their own wealth. Ironically, this same script has been playing out between China and the West for centuries, with the tide swaying back and forth. There was a time when China only sold its most prized possessions to (mostly) British citizens in return for their silver.

The trade saw so much silver sent to China that other European nations became alarmed, while the work load was too much for indigenous mine-workers in the New World, this sparked demand for more rugged workers from the continent of Africa. There are two versions of what happened next, but the introduction of opium into China, as a cure-all began a reversal of silver flow out of the country and back into the coffers of Great Britain. Eventually, there would be a revolt ignited by Chinese leaders burning 20,000 chests of opium. The loss of that war triggered a series of wars and misfortunes that left China a wreck.

It all accumulated in the Boxer Rebellion: an uprising of peasants against their feeble Chinese rulers, but also against Western civilization, including Christianity. In order to fight back, China needed help from Japan and Western nations at an economic toll, which explains how debt destroys. China owed an indemnity of $335 million in silver and additional interest payments in gold.

The rest to other nations including Spain, The Netherlands, and Austria-Hungary:

Of course, there are many observations on how China became indebted, but the fact that it was debt to the rest of the world should serve as a cautionary tale for America, seems to be lost. Instead, the biggest worry is if the money stops coming. Well, the proverbial shoe is on the other foot; and while it's not necessarily looting- the Chinese are buying everything America is willing to sell.

First Emperor

"With his puffed-out chest like a hawk and voice of a jackal, Qin is a man of scant mercy who has the heart of a wolf. When he is in difficulty he readily humbles himself before others, but when he has got his way, then he thinks nothing of eating others alive.

"If the Qin should ever get his way with the world, then the whole world will end up his prisoner." -Sima Qian, China's Grand Historian. (BBC)

In 221 BC, Qin Shi Huang (known for the terracotta soldiers and horses that guarded his mausoleum) began unifying China, and would eventually give himself title, as First Emperor. His accomplishments were as significant, as China was a series of kingdoms with vastly different cultures, languages, diets, and beliefs. He was ruthlessly determined in uniting China. He introduced a national highway, a single calendar, coinage, weights and measures, codified law, and introduced tax collection. In addition to brutality, his rule was stiffened by the murders of scholars, and the burning of books. Fast forward to 1949, when Mao began the People's Republic, invoking Qin and driven by the humiliation of China. He burned books, slaughtered thousands of scholars, and ruled with brutality once saying of Qin: "He buried 460 scholars alive - we have buried 46,000 scholars alive."

Now fast forward to the present: Maoism has faded, and faint hopes of revival were crushed in the past couple of years. China is making up for lost ground. (I read a story yesterday about China's rapidly advancement in innovation.) Once again, by the wealth accumulated from trade with the West, money pours into the coffers of China, but this time they aren't going to let it go up in smoke. Instead, the hundreds of billions are being used to buy the West. In addition to debt in dollars and Euros, investors from China have purchased our largest pork producer, and continue to gobble up as much real estate as possible.

China is sitting on $3.82 trillion in foreign-exchange reserves. Now, it's undisciplined America and other profligate western nations that are squandering their futures.

Last January I gave a speech in Mobile, Alabama, and got into a great conversation with the driver that picked me up from the airport. I asked how the economy was doing, he said," it was great," (oil port) then asked specifically about the "brothers." He replied, "Mobile was doing great for anyone that wanted to work," but somehow the conversation shifted to the best soul food spots.

To my surprise, he told me all had been sold to people from China. He added..."and the food is great! "

I was bewildered as to why everyone sold out. He continued by saying, "folks worked hard, their kids were not that interested or lacked the same work ethic, and the price was right." Of course, it's not just soul food joints in the south- the Chinese spending spree is a nationwide phenomenon.

In this week's Beige Book report, there was a note about a Chinese investment of $40 million near bankrupt Harrisburg, Pennsylvania. In 2011, Chinese investment in US real estate topped $10.0 billion, and then $8.2 billion in 2012, and surely the final tally will be higher for 2013. From condos in Brooklyn to $25,000 parcels in Detroit.

Agony...One way or another:

"He who will not economize will have to agonize" -Confucius

I'm not xenophobic and in fact welcome free and fair trade, especially when we have the goods. I admire how China dug in for decades, working for crumbs and saving half of them. They haven't and still don't play by the rules, and that's largely the fault of American leaders that allow this to happen. Of course, the reason it is happening is, we cannot ask Americans to agonize in a way that would resemble economic pain anywhere else in the world. I keep hearing the words sacrifice, but it seems to mean that I pay more taxes and get demonized in the process.

"The harder I work, the more I owe the state, the less I work, the more the state owes me." -Charles Payne

We have abandoned principles of sacrifice and dedication and replaced it with entitlement and comfort. The soft landing has become an American birthright, but a hard landing would jar our senses. The debt is mounting and a whirlwind of agony is around the corner. At the rate we're going, Qin will get his way, and the whole world will end up his prisoners; or in the case of America, his indentured servants.

For all the spendthrifts out there, don't worry; the spigot has only begun to pour it on.

The elected leadership and certain corporations with their lobbies got us to this point - they should be held accountable...I’m reading everything I can find on the advancements and THREATS that China now poses presently as they target the US!

It’s payback time and the US politicians didn’t do their job - greedy and stupid little bastards that they are!

The elected leadership and certain corporations with their lobbies got us to this point - they should be held accountable ...

I'm sorry, but I call BS on this one. The biggest contributor to this problem is the development and growth of a massive welfare/entitlement state here in the U.S. The real problem isn't elected leaders and corporations with lobbyists. It's people collecting Social Security checks and getting medical expenses paid on Medicare's dime for decades after they've stopped working. It's people collecting government checks who don't work at all. And it's people spending 20+ years in various levels of a taxpayer-funded "education" system without ever getting educated at all.

You get the picture.

China can own this country from top to bottom if they want to, but I'm not sure why they'd even want to. In my business, the United States of America would be considered a "non-performing asset" by any objective measure.

5
posted on 01/18/2014 8:15:04 AM PST
by Alberta's Child
("I've never seen such a conclave of minstrels in my life.")

ALthough I agree with the welfare being a total waste of tax payers money and a form of govt control...we are talking about bring back to the US manufacturing jobs and end the trade with China - who steals our R&D - kicks out US companies once they no longer needs them - and pollutes it’s our soil and then ships those products raised in that filth to the US...Welfare is a problem - but it is one of many — and instead of paying out welfare - those people who be forced to work - but at present, the US is lacking big time on manufacturing jobs and sound business ethics...you can call bullshit all you want - but my point was focusing on China - not the issues that plague the US - and if China did take over - there would be no welfare!

So - I stand by my original statement that the elected leaders had better start looking at the immediate future of securing our national infrastructure when it come to those elements that make a strong economy! Yes, welfare takes away from that - but not having actual physical companies that provide manufacturing jobs - right now - there are little to none in most areas...

The days when thousands of people would show up for work every day at a manufacturing facility in Detroit or Cleveland are over, no matter how hard anyone tries to change reality.

If China shut down tomorrow and every manufacturing process were moved back to the U.S., the typical domestic factory would have millions of square feet of plant space operated by several dozen employees.

I don't know what the answer is, but China isn't really the problem here.

7
posted on 01/18/2014 9:09:20 AM PST
by Alberta's Child
("I've never seen such a conclave of minstrels in my life.")

The elected leadership and certain corporations with their lobbies got us to this point - they should be held accountable ...

The owners of said major corporations have invested heavily in the demise of America via tax-exempt "charitable" foundations: Rockefeller, Pew, Jones, Ford, Carnegie, Packard... ALL have invested big dollars in sexual debauchery, Federalized education, and regulatory destruction of industry, especially to "save the environment."

I think as one poster commented - it’s the welfare state of mind — the mindset by most on welfare that they can do whatever while sitting on their arses and get paid...there’s really no work ethic left in them...

Maybe that’s what he/she meant to say...the ethics of showing up and WANTING to do a great job for personal responsibility - and if manufacturing returned to the US - there would be people wanting to work and produce great products...but every year that desire diminishes as those that would have onced worked get enslaved into welfare and think nothign of it...

Ethics - values - standards have all gone to hell in the US! We let this problem fester and grow into the infection that is killing our nation!

How does Country A collect on debt owed by Country B? As Marshal-Admiral Isoroku Yamamoto, head of the Imperial Japanese Navy during World War II was once rumored to say “You cannot invade the mainland United States. There would be a rifle behind every blade of grass.”

>>>China can own this country from top to bottom if they want to, but I’m not sure why they’d even want to. In my business, the United States of America would be considered a “non-performing asset” by any objective measure.<<<

In a hostile business takeover, the buyer cleans out bad management, fires unproductive employees, gets rid of bad assets, and installs new workplace rules that the buyer considers to be more profitable.

I’d imagine your outlook is spot on concerning the problems facing anyone seeking to conquer the country. However, a better model might be the British takeover of India. The governor of Alaska would be allowed to do what he wants, the Yup’iks would be able to dance, and everyone would keep their guns, but those who worked for and with the Chinese bosses would be richly rewarded, while those antagonistic would find no jobs, no schooling, and no support. I would think that malcontents would be dealt with harshly and selectively, using the muscle of American police and military. The Chinese guy running it all would keep his hands clean. And his bank account full.

Disclaimer:
Opinions posted on Free Republic are those of the individual
posters and do not necessarily represent the opinion of Free Republic or its
management. All materials posted herein are protected by copyright law and the
exemption for fair use of copyrighted works.